401(k). The Bank has a 401(k) retirement plan that covers substantially all eligible employees. During fiscal 2012, the Bank amended the plan to make “safe harbor” matching contributions of up to 4% of eligible compensation, depending upon the percentage of eligible pay deferred into the plan by the employee. Additional profit-sharing contributions of 5% of eligible salary have been accrued for the plan year ended June 30, 2012, based on financial performance for fiscal 2012. Total 401(k) expense for fiscal 2012 and 2011 was $413,000 and $385,000, respectively. During fiscal 2010, there were no contributions made to the plan. At June 30, 2012, 401(k) plan participants held approximately 205,000 shares of the Company’s stock in the plan. Employee deferrals and safe harbor contributions are fully vested. Profit-sharing or other contributions vest over a period of five years.

Employee Stock Ownership Plan (ESOP). The Bank established a tax-qualified ESOP in April 1994. Effective September 30, 2010, the plan was merged with and into the Bank’s 401(k) retirement plan. The Bank made discretionary contributions to the ESOP for fiscal 2010 of $240,000. Benefits are vested over five years; that vesting schedule remains intact following the merger into the 401(k) plan. At June 30, 2010, the ESOP held 225,139 shares of the Company’s stock, all of which were allocated. Shares held by the ESOP were transferred to participant 401(k) account balances effective September 30, 2010.

Management Recognition Plan (MRP). The Bank adopted an MRP for the benefit of non-employee directors and two MRPs for officers and key employees (who may also be directors) in April 1994. During fiscal 2012, the Bank granted 3,036 shares to employees. During fiscal 2008, the Bank granted 2,500 MRP shares to employees. The shares granted are in the form of restricted stock vested at the rate of 20% of such shares per year. During fiscal 2012, 500 MRP shares vested, which had been awarded in fiscal 2008. Compensation expense, in the amount of the fair market value of the common stock at the date of grant, was recognized pro-rata over the five years during which the shares vest.

The Board of Directors can terminate MRP awards at any time, and if it does so, any shares not allocated will revert to the Company. The MRP expense for 2012, 2011, and 2010, was $11,000, $13,000, and $12,000, respectively. At June 30, 2012, unvested compensation expense related to the MRP was approximately $65,000.

Equity Incentive Plan. The Company adopted an Equity Incentive Plan (EIP) in 2008, reserving for award 66,000 shares. EIP shares are available for award to directors, officers, and employees of the Company and its affiliates by a committee of outside directors. The committee has the power to set vesting requirements for each award under the EIP. The first awards under this plan were made to directors and officers on June 29, 2012, totaling 36,964 shares, in the form of restricted stock, which will vest at the rate of 20% of such shares per year. At June 30, 2012, unvested compensation expense related to the MRP was approximately $795,000.

Stock Option Plans. The Company adopted a stock option plan in April 1994. The 1994 stock option plan expired in 2004, and the final options awarded and outstanding under that plan were exercised during fiscal 2011. In October 2003, a new stock option and incentive plan was adopted (“2003 Plan”). Under the 2003 Plan, the Company has granted 116,000 options to employees and directors, of which, 2,500 have been exercised, 22,500 have been forfeited, and 91,000 remain outstanding. Under the 2003 Plan, exercised options may be issued from either authorized but unissued shares or treasury shares.

As of June 30, 2012, there was $45,000 in remaining unrecognized compensation expense related to nonvested stock options, which will be recognized over the remaining weighted average vesting period. The aggregate intrinsic value of stock options outstanding at June 30, 2012, was $608,000. The aggregate intrinsic value of stock options exercisable at June 30, 2012, was $485,000. During fiscal 2012, options to purchase 1,500 shares were exercised. The intrinsic value of these options, based on the Company’s closing stock price of $21.50, was $9,000. The intrinsic value of options vested in fiscal 2012, 2011, and 2010 was $44,000, $47,000, and $4,000, respectively.

	2012		2011		2010
	Weighted		Weighted		Weighted
	Average		Average		Average
	Price	Number	Price	Number	Price	Number
Outstanding at beginning of year	$ 14.44	87,500	$ 13.77	105,500	$ 14.01	85,500
Granted	22.35	5,000	-	-	12.75	20,000
Exercised	15.23	(1,500)	7.52	(11,000)	-	-
Forfeited	-	-	15.23	(7,000)	-	-
Outstanding at year-end	$ 14.87	91,000	$ 14.44	87,500	$ 13.77	105,500
Options exercisable at year-end	$ 14.77	72,000	$ 14.94	68,500	$ 14.10	80,500

The following is a summary of the assumptions used in the Black-Scholes pricing model in determining the fair values of options granted during fiscal years 2012 and 2010. (No options were granted in fiscal 2011):

	2012	2011	2010
Assumptions:
Expected dividend yield	2.15%	-	3.76%
Expected volatility	20.75%	-	18.08%
Risk-free interest rate	2.18%	-	3.70%
Weighted-average expected life (years)	10.00	-	10.00
Weighted average fair value of	$4.66	-	$1.95

The table below summarizes information about stock options outstanding under the plan at June 30, 2012: